Developments in Major Fields of Economics
Edited by Gilbert Faccarello and Heinz D. Kurz
Chapter 21: Income distribution
The distribution of output among the members of society is one of the oldest and most important topics of economics. The technical use of the term “distribution” dates back to the Physiocrats and appears in the very title of Anne-Robert-Jacques Turgot’s Réflexions (1766). The first book of the Wealth of Nations (Smith 1776 , hereafter WN) concerns “the Order, according to which [the] Produce is naturally distributed among the different Ranks of the People” (WN, see title of book I); David Ricardo regarded this distribution as “the principal problem in Political Economy” (Ricardo 1951–73, hereafter Works, I: 5). Even though distribution has not always been on top of the agenda of economic theory, the measure and explanation of the shares of profits and wages, their international differences and their evolution through time are still a lively object of investigation, both by academics and by international organizations (a recent survey is in Atkinson 2009). Likewise, household inequality and wage differentials are widely investigated in current literature (for example, Atkinson 2007; Checchi and Garc'a-Pe-alosa 2008). The distribution among different kinds of labour, capital owners and rent seekers, on one side, and the distribution among individuals (households), on the other, are usually referred to as “functional” and “personal” distribution, respectively. In a long span of time, quite naturally, a series of different (and sometimes contrasting) approaches have evolved. It is hardly possible to fit them along a line of cumulative scientific progress and, at any rate, this is not the aim of the present brief historical account. If there is a clear element that embraces such an evolution, it is variety.